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What is a Simplified SWOT Analysis Definition in 4 Steps

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What is the SWOT analysis definition in simple words? SWOT analysis is a situational analysis carried out for different purposes, usually but not necessarily by businesses. This analysis is used to assess four different factors related to any situation:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

All these factors can be about a situation, an organization, or an individual’s career; there are very few limits regarding where SWOT can be applied. Here, we will be discussing what is a SWOT analysis, and its importance for organizations.

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The SWOT Analysis Definition for Organizations

For an organization, this analysis is a framework that helps them analyze all internal and external factors that might impact their current plans. These plans can be regarding a new product, project, or strategy that the company is going to undertake currently.

In a very precise and simple manner of the SWOT analysis definition, a SWOT analysis helps a company understand what the dynamics of everything related to the situation being contemplated are. Over the years, this analysis has been adopted by a number of different firms and there is a large number of successful SWOT analysis examples that can be used as guides.

In this analytical model, strengths and weaknesses are considered as the internal factors, completely controllable by the organization itself. Opportunities and threats, on the other hand, are regarded as external factors that might or might not be controllable by the organization.

SWOT Analysis definition: Benefits of the analysis

SWOT analysis can be conducted for a situation, an organization, a project, a new venture, a country, a nation and even individuals. SWOT analysis definition can help organizations in their strategic planning process, and in matching their capabilities and resources to the competitive environment in which it carries out its operations.

SWOT analysis is a dynamic part of an organization’s business and management development process. It entails the collection of information pertaining to external and internal factors which may have an impact on the organization’s evolution. The SWOT analysis definition takes into consideration the weaknesses and strengths of the organization along with the threats and opportunities it faces in the external environment. Based on these factors, the company determines its future course of action, combining its strengths with imminent opportunities while trying to overcome weaknesses and combat threats.

An organization may also perform SWOT analysis for identifying whether the venture/project it is about to undertake is feasible and worth investing in or not. It is only after the project’s strengths and opportunities are outweighing the inherited weaknesses and threats that the project or venture will be undertaken and invested in.

The SWOT analysis definition states that after thoroughly analyzing every element lying in these categories, an organization should work towards managing and developing further the strengths and opportunities while weaknesses and threats should be eradicated.

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While some factors in the SWOT analysis are internal to the venture being undertaken, others are external to it. Internal factors are ones which involve the internal operations and resources of the organization including the strengths and weaknesses inherent to the project/ venture. External factors, on the other hand, are related to the external environment and on which the organization have no influence, including opportunities and threats.

A company’s resources and its quality of performance are usually factors that become their strengths or weaknesses. Opportunities and threats are market factors and trends that can either benefit or harm the company’s current plans.

The SWOT analysis definition implies that this analysis is usually carried out before a company is in the process of developing a new product, project, or strategy to determine whether their resources are matched against the competitive market to make the situation a success.

Based on the results, organizations can determine whether a new project is worth pursuing or not and if yes, what additional resources or actions would be required to make it successful. An organization’s physical, financial and human resources, its processes, past experiences, reputation, competitors, the market movements for the product/service company is offering, the movement of their complementary and substitute products, and other micro- and macro-economic factors are all included in this analysis.

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SWOT Analysis definition: The 4 factors

Here is an explanation of the different factors considered for the SWOT analysis:

  • Strengths

Strengths refer to the internal characteristics which may be deemed favorable for the organization.

  • Weaknesses

Weaknesses refer to the internal characteristics which may be deemed unfavourable for the organization.

  • Opportunities

Opportunities are external characteristics which the organization may use to its advantage.

  • Threats

Threats are external characteristics which may be potential sources of failure to the organization.

SWOT analysis finds applications in a variety of situations and may be applied for assessing the feasibility of the different options available as a solution to a particular problem or challenge. It can also be applied for identifying opportunities and to weigh them against imminent threats and to arrive at a final decision regarding any challenge. SWOT analysis helps organizations in determining the factors that will work in their favour and those that will work against them in achieving the desired result and objectives.

What is the definition of a successful SWOT analysis?

According to the SWOT analysis definition, the key to the success of this analysis is carrying out an honest and unbiased analysis. There is no need to be modest about your qualities while on the other hand hiding your weaknesses is also not going to make this analysis work. A SWOT analysis only succeeds in helping the organization at best when everything is assessed in a brutally honest way.

The key to performing an effective SWOT analysis is that it clearly distinguishes where the organization is today and where it is likely to be in the future. Moreover, it is also important to be realistic about the organization’s strengths and weaknesses and to keep the outcome subjective, simple and short.

SWOT analysis is completely subjective in nature and two people could come up with a completely different set of factors. Therefore, the SWOT analysis is usually conducted by a management team in a brainstorming session. It is often supported by several other factors tests like PEST analysis and Porter’s Five Forces analysis to ensure that the factors realized are authentic and real, and not just perceived.

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